Sally Beauty (SBH) Receives Upgrade to Buy: Reasons Explained
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 08 2025
0mins
Should l Buy SBH?
Source: NASDAQ.COM
Sally Beauty Upgrade: Sally Beauty (SBH) has been upgraded to a Zacks Rank #2 (Buy) due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price.
Earnings Estimates Impact: The Zacks rating system emphasizes the correlation between earnings estimate revisions and stock price movements, suggesting that rising estimates can lead to higher stock valuations.
Zacks Rank System: The Zacks Rank system classifies stocks based on earnings estimates, with only the top 20% receiving a "Strong Buy" or "Buy" rating, highlighting Sally Beauty's strong position in this context.
Future Earnings Projections: Analysts have raised their earnings estimates for Sally Beauty, projecting earnings of $2.06 per share for the fiscal year ending September 2026, which remains unchanged from the previous year.
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Analyst Views on SBH
Wall Street analysts forecast SBH stock price to rise
4 Analyst Rating
2 Buy
1 Hold
1 Sell
Hold
Current: 15.230
Low
13.00
Averages
15.88
High
19.00
Current: 15.230
Low
13.00
Averages
15.88
High
19.00
About SBH
Sally Beauty Holdings, Inc. is an international specialty retailer and distributor of professional beauty supplies. The Company operates in two business segments: Sally Beauty Supply and Beauty Systems Group, which offers beauty products in key categories, including hair care, hair color, styling tools and nails. Sally Beauty Supply is an omni-channel retailer that offers professional beauty supplies and provides education to retail consumers and salon professionals throughout North America, South America and Europe. Sally Beauty Supply stores offer up to 7,000 products for hair color, hair care, nails, and skin care through proprietary brands, such as Ion, Bondbar, Strawberry Leopard, and Generic Value Products. Beauty Systems Group stores, branded as Cosmo Prof or Armstrong McCall stores, along with its outside sales consultants, sell up to 8,000 professionally branded products, including Paul Mitchell, Wella, Matrix, Schwarzkopf, Kenra, Goldwell, Joico, Amika and Moroccanoil.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Broad Market Gains: U.S. stocks mostly closed higher on Monday, with the Nasdaq Composite jumping over 200 points to 23,238.67, suggesting strong performance in tech stocks driving overall market positivity.
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- Sally Beauty Earnings Beat: Sally Beauty Holdings Inc (NYSE:SBH) reported an adjusted EPS of 48 cents for Q1, surpassing market expectations of 46 cents, with quarterly sales of $943.168 million exceeding the anticipated $940.150 million, demonstrating the company's resilience in a competitive market.
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See More
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- Strategic Transformation: The company exited lower-margin full-service operations in Europe, projected to create a $10 million sales headwind in 2026, but this strategic shift aims to simplify operations and focus on high-growth areas, enhancing overall profitability.
- Significant E-commerce Growth: Sally's global e-commerce sales grew by 20%, with U.S. and Canada e-commerce sales up 28%, indicating substantial progress in digital transformation and improved customer online shopping experiences.
- Optimistic Outlook: The company raised the low end of its full-year EPS guidance to $2.02 to $2.10, expecting Q2 sales between $895 million and $905 million, demonstrating management's confidence in future performance and positive market expectations.
See More
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- E-commerce Growth: Global e-commerce sales reached $111 million, accounting for 11.7% of net sales; while consolidated comparable sales remained flat, the growth in e-commerce supports future sales potential and reflects changing consumer shopping habits.
- Cash Flow Performance: The first quarter saw cash flow from operations of $93 million and free cash flow of $57 million, demonstrating strong cash flow performance that supports ongoing investments and shareholder returns, indicating a healthy financial position for the company.
- Fiscal Year 2026 Guidance: The company projects Q2 net sales between $895 million and $905 million, with adjusted EPS guidance of $0.39 to $0.42, reflecting confidence in future growth despite slight discrepancies with market consensus.
See More
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- Strong Financial Performance: Sally Beauty achieved a 12% growth in adjusted EPS for Q1 of fiscal 2026, indicating the company's ability to meet market expectations while maintaining healthy gross margins, which enhances investor confidence.
- Robust Cash Flow: As of December 31, 2025, the company reported $93 million in cash flow from operations and $57 million in free cash flow, enabling it to repay $20 million in term loan debt and repurchase 1.4 million shares, thereby increasing shareholder value.
- Optimized Inventory Management: The company's inventory stood at $979 million, down 2.7% year-over-year, demonstrating effective inventory management that helps improve operational efficiency and reduce capital lock-up.
- Ongoing Strategic Investments: The company continues to advance its strategic initiatives aimed at accelerating growth and enhancing profitability, which not only lays the groundwork for future market expansion but also creates long-term value for shareholders.
See More
